Paulson outlined for groups of subprime borrowers: 1) Those who can afford the higher rates--they don't need the help. 2) Those who haven't even made payments on their starter rates--they will likely become renters again. 3) Those who can refinance to some other loan. 4) Those with steady incomes and clean payment histories who can afford the lower introductory rate but not the higher rates.

It's this last group that Paulson said he is focusing on. He is also talking about:

1) Allowing state-funded bond programs to temporarily broaden their tax-exempt bond programs to include mortgage refinancings, providing money for home owners in need of refinancing. 2) Permitting the FHA to be more flexible in their lending policies. 3) Allowing for tax relief for mortgage debt that has been forgiven.

Elsewhere:

1) Financials a tad weak here; Countrywide CEO Angelo Mozillo on the tape saying that liquidity is "very difficult" to get and is also calling for a "more active" Fannie Mae and Freddie Mac .2) If weak economic news is what the Fed needs to cut, it continues to get it. Today's ISM number, an indication of manufacturing activity at the wholesale level, came in at the lowest level since January, though it was in line with expectations. 3) Florida Power and Allegheny at new highs as the Dow Utilities hits an historic high. As Peter Schacknow on our desk points out, Buffett bought TXU junk bonds and made it clear it was more of a vote for utilities than it was for junk bonds. Remember, TXU is now privately held by Kohlberg Kravis Roberts and TPG.